Supply Chain Blog

FMCG Mergers & Acquisitions - Why acquired brands fail to deliver

Posted by Dave Jordan on Wed, Jul 18, 2018

Let me get straight to the point on this one. Why do so many FMCG mergers or acquisitions frequently result in the apparent death-knell of once proud and promising brands? I am not going to name any names but if you think about it there have been some real clangers dropped by blue-chip FMCG giants.

Purchased companies or individual brands are usually already reasonably successful in order to attract new owners. Yes, sometimes companies will divest weaker brands or brands no longer core to their portfolios but you will struggle to sell a clearly decaying brand name. A real hospital pass if ever there was a branded one.

I am studying such a case in Europe at the moment where the FMCG brand acquisition is about 12 months old so plenty of time for smooth integration or so you would think. Marketing activity has not changed and I am also assured above and below the line advertising spend has been maintained at pre-acquisition levels. That in itself is unusual as sellers usually spend big to make a brand more attractive at sale time.

So why does an apparently attractive acquisition fail so quickly? Nothing at all to do with marketing or finance but everything to do with the extended Supply Chain. Just to be clear here I do not consider the Supply Chain to end at the distributor’s warehouse in Traditional Trade markets you commonly find in CEE, Africa and the Middle East. You need Supply Chain skills to get products on to shop shelves and then keep them replenished. With due respect to salesman and women, they are trained to sell.

Supply chain rtm m&a resized 600The newly acquired brand that was purchased with buoyant sales and a high profile has been dragged down to the level of the existing brands by inadequate Supply Chain and Route To Market (RTM) operations. Frankly, it did not stand a chance and it is no wonder the company wanted to buy a top selling brand when their own were performing so badly. However, the reasons for failure were all in-house as the once top selling brand plunged the depths.

There was no formal Supply Chain department with planning, logistics and customer service roles scattered around in Finance and Sales departments. There was no focus and no single person to co-ordinate and run a functioning Supply Chain. Forecasting accuracy; what’s that? Stock cover; no idea. S&OP; forget it Customer service; no!

Couple that level of disorganisation with a bonus-centric, forecast averse sales force trying to run the distribution chain through to the TT shop shelf and it is no wonder all the presentation arrows were red and pointing south.

When considering an acquisition to bolster sales and profit make sure your existing SKUs are not already blighted by lack of care an attention to your Supply Chain and RTM.

Image courtesy of renjith krishnan at freedigitalphotos.net

Tags: FMCG, Route to Market, Mergers & Acquisitions, Dave Jordan, CEO, Traditional Trade, Forecasting & Demand Planning, Distribution

Supply Chains - Whats do all those initialisms mean?

Posted by Dave Jordan on Wed, Jun 27, 2018

Like many business functions Supply Chains use multiple initials and/or acronyms to describe various tasks they manage on a daily basis. Those not familiar with SC-speak will often sit bemused in meetings as various initials are quoted and debated and then usually blamed for some tenuous lost sale claimed by Sales and Marketing. Here we take a look at just a small selection of those initials.

SC – Super Colleagues. Well, I may be biased but that is what you find is usually the case. Supply Chain people have to react to wildly varying demands and impossible timings but more often than not they succeed to get stock in the right place at the right time.

SOP - Secures Our Performance. If you do not follow an S&OP process and your business is doing well and is robust then a pat on the back is for you. If your business is struggling then you might consider the benefits of S&OP which can make all the difference.

SC Abbreviations resized 600

SAP - Spreadsheets Are Preferred. A common problem in many businesses and what is also common is the number of CEO’s who believe spreadsheets are not being used in their workplace! They probably are but what can you do about it?

IKA- Irritating, Keep Away. In Western Europe the big name Key Accounts may well be the future of retailing in the FMCG sector but in many other parts of the world the reality is quite the reverse. Traditional Trade is a very important part of many businesses yet most fail to pay sufficient attention to the continued development and growth of the TT channel.

SKU - Sales Keep Upping. Introducing new SKUs really should be a cross business decision taken within the context of S&OP and with sound financial analysis. Sadly, this does not happen very often as businesses rack up lengthy SKU lists where the tail items do not even pay for themselves in turnover and/or profit.

KPI - Keep People Interested. The old adage of “if you don’t measure it then you cannot improve it” is certainly true here. Be careful not to have too many KPI’s but make sure you have a small set which ensures everyone knows how they impact team performance and results. Reward against the relevant KPIs and your staff will target them keenly.

3PLP - 3 People Loading Products. Think long and had before outsourcing your logistics operations to a 3rd party. They may not be ready to take on your business seamlessly.  Prepare thoroughly and ensure you know exactly what you want from them and the relationship. A big step that is difficult to reverse so be very careful!

WMS - Where’s My Stock? Your 3PLP partner should be left to run their own business as that is what you pay them for. However, you need to be involved in the stock counting process or you will lose sales through out of stocks (OOS , there's another one) and experience costly year-end write offs.

4PLP - 4 People Loading Products ………..but perhaps slightly faster? If you have successfully used 3PLPs for some time you might wish to take a look at what a 4PLP can offer your business. This is not for everyone but can be very effective.

RTM - Retail Takes Money. Whether your focus is on IKA or TT how you manage your distribution network will be a key driver of your success in the market place. It is a fact that companies spending time and effort getting their TT distributor networks in good order are far more successful.

There are many, many more initials used in Supply Chain but this set will do for a kick off so TTFN!

Tags: SKU, FMCG, Route to Market, Dave Jordan, KPI, Traditional Trade, S&OP, Logistics Management, Distribution

FMCG Route To Market: Until debt do us part

Posted by Dave Jordan on Wed, Jun 20, 2018

What about your company? Do you have great brands and brand awareness, a fantastic extended supply chain, an analytics package, tight financial control, top class HR, the best sales force, innovative marketing? If you tick all these boxes then life must be good, yes? Sadly, not always and some big-name companies frequently get the important distributor relationship badly wrong.

Blue chip companies with internal operational excellence continue to flounder when serving the Traditional Trade, particularly in D&E markets. Admittedly, this trade channel has reduced in importance over the past years but it still accounts for a sizeable portion of markets which are starting to return to growth. International Key Accounts and Local Key Accounts will continue to take share in urban areas but in a country as vast as Romania, for example they will not conquer the rural market in the medium term.

Producers need knowledgeable and reliable Route To Market partners to reach the smaller corner shop outlets and kiosks. There is no shortage of operators willing to be distributors for big name clients but how many of them are really equipped and ready to do the job properly? Producers are often guilty of placing their reputations and ultimately profits, in the hands of enthusiastic amateurs. In the sporting definition, true amateurs do not get paid for their work and distributors do not get paid by producers when they fail to meet targets.

Unfortunately, instead of doing something about the short-comings of distributors, producers proudly celebrate securing penalties or better terms through negotiating against poor performance. What is the point of doing that? Instead of carping on about how terrible are these "partners" why not get out there and help them?

You cannot build houses on sand yet producers expect distributors to swiftly dove-tail into their in-house processes, IT, style, ethics, reporting schedule etc. Yes, they probably exaggerated their capabilities and readiness during the selection pitch but you should be able to see through that or at least be ready to quickly assess capability.

Is it any wonder why so many distributors go under when they are not considered partners and in some cases, are believed to be a hindrance? Distributors do not deliberately make mistakes that lead to their own reduced income. They too are in business to make a few Euros to take home at the end of the month. However, when the penalties add up and the distributor gets into debt, that is when they need producer support and not a kick to the stomach.FMCG_RTM_DISTRIBUTORS_PARTNERSHIPS.jpgProducers need to look closely at the capability matrix offered by their distributors (or more importantly, potential distributors) and in most cases, this will not match up to requirements. Do something about this; build capability where it lacks and you will reap the benefits in having proactive partners going that extra kilometre to make a sale for you. 

Those FMCG producers who are in tune with distributors strengths and weaknesses AND do something about the latter will be in pole position with a Ferrari while less wise competitors are at the back of the grid with a horse and cart. The route to your market can be a lot easier than you are making it!

Image courtesy of Stuart Miles at freedigitalphotos.net

 

 

Tags: FMCG, Route to Market, Dave Jordan, Distribution

7 Deadly Sins: Why FMCG Distributors are Overstocked in CEE

Posted by Dave Jordan on Wed, Jun 13, 2018

How I guffaw when I hear producers complain about traditional trade distributor overstock.Make no mistake Mr. Producer, YOU put the stock there, oh yes you did! Distributors don't buy stock for something to do or a laugh and a giggle. Excess stock blocks up their warehouses and locks up their cash.

Why does this happen in even the largest companies?

1. Month, quarter and year-end push. "Targets have to be met so push as much stock as possible into the Distributors." This is simply loading and is not real sales.

2. Failed launches. Unrealistic Producer sales objectives leading to slow moving goods which sit in warehouses.

3. Old label stock. Perfectly good stock but the pack with the new artwork is being sold already and nobody wants this "old stuff".

4. Old and expired promotions. Funding support has ended so what do we do with all these left over promo packs? Don't expect sales and marketing colleagues to help.

5. Returns from customers. Still arguing about who is to pay for these returns? You should have had clear SLAs and contract in place.

6. Producer forecasting errors. Nobody wants to lose face at Producer HQ so the stock sits and gathers dust until it expires or is stolen.

7. Damaged and expired. Damages happen, get them written off AND destroyed and get over it. You can avoid expired goods - see above!

Overstocked Distributors

You might think your Distributors have a healthy 21 days of cover but in reality they are operating with a much lower level of saleable stock, ie what consumers actually want to buy.The rest sits in their books and in your stock cover numbers but it contributes nothing to sales. In fact, it negatively affects sales as stock that is in demand is available at too low levels or not at all to meet customer requirements.

"Those distributors have so much stock but my Customer Service level is rubbish".  IT IS NOT A SUPPLY CHAIN PROBLEM!

 

Tags: Dave Jordan, CEE, Traditional Trade, Distribution, Inventory Management & Stock Control

An FMCG Success Story; Focus on customers and enjoy the consumer benefits

Posted by Dave Jordan on Mon, May 28, 2018

Once upon a time there was an FMCG company that I will refer to as “Foresight”. “Foresight” had spent many years and many Euros creating a slick inbound Supply Chain.

  • Top class global, regional and collaborative buying
  • Flexible manufacturing network
  • A state of the art ERP
  • Rigorous S&OP as the key business process

Slick inbound Supply ChainWith all those important boxes ticked they must be successful.....but they were not; not even close. In their peer group they were not number 1, top and bottom line growth was getting harder and harder. Throw in difficult economic conditions and the consumption of their product offering plummeted – double digit style. A large FMCG business and quite a few personal reputations were not looking pretty.

The problem was a surprising lack of focus at the customer end of the Supply Chain. Both International Key Accounts(IKA) and the Traditional Trade (TT) were being poorly serviced.

A lot of hard work upstream was being wasted through inefficiency and actually, ignorance. The situation had existed for a number of years but as the same malaise was common in the industry nobody could see the benefit or indeed the need for “getting ones act together”. “Last amongst equals” was hardly a motivating and compelling business proposition for an international big name.

Seeking external expert assistance “Foresight” started out on an adventure that would change the way they approached business at the customer end of the chain.

Customer Service.   This was something “Foresight” thought it was already good at providing but critical aspects were lacking:

  1. Customer Service responsibilities were fragmented and lacked clear and unambiguous leadership.
  2. “Customer Service personnel” had received no training in the subject - nobody really wanted to take responsibility.
  3. “Customer Service” was actually limited to invoice preparation. Proactive interaction with customers and problem solution were not in job descriptions.

This hardly projected an image of a caring “Foresight” and this was a huge risk considering the increasing power of the retailers…. 

Route To Market (RTM). “This is under control for TT and it seems to work”, however RTM was in the Sales black box and that box needed opening and shaking upside down vigorously!

  1. The Distributor RTM network had been in place for several years and was decaying. “Foresight” salesman interaction with Distributors was far from an open win-win relationship.
  2. Several Distributors were simply incapable and/or ill equipped to represent such a major company. Some actually did not wish to be involved.
  3. “Foresight” did not know on whom they could rely in their network or how large and obvious opportunities could be targeted.

In-house Sales bonuses were linked to sell-in and the remaining steps to the consumer were ignored at “Foresight” level and left in the hands of some indifferent distributors.

The cures were not simple or quick but they were effective and the payback was fast and sustained.

Customer Service Centre“Foresight” now operates a centralised Customer Service department looking after customer needs in a standardised and caring manner. Phone calls are answered by someone who wants to help and the customer is not passed from pillar to post trying to find someone interested in their problem. Retailers now see CS staff face to face as they proactively take steps to understand the needs of both sides of the partnership. The Retailer office was once “sales only” and off bounds to other departments but not now and the benefit is clear and significant.

In RTM, “Foresight” carried out a comprehensive assessment of their distributor network making evaluations of all aspects of each distributor’s organisation. The strengths and weaknesses of each partner are now known and understood. “Foresight” now knows where there is receiver capacity to take more responsibility and a leading role in market deployment. Similarly, they also know to tread carefully with a number of distributors who are struggling financially or simply not equipped to meet expectations. “Foresight's” efforts are now focused on those areas providing maximum opportunity and reward. The “one size fits all” approach has gone and distributors are managed as important partners.

In combination these changes have transformed the business and success has been quick to materialise.  “Foresight” enjoys a leading position in its sector while competitors scrap around trying to find growth that is clearly there but they cannot reach.

For “Foresight” at least, they really are able to live happily ever after!

 

Tags: Customer service, Brewing & Beverages, FMCG, Route to Market, Dave Jordan, Performance Improvement, Distribution

An FMCG Distributor Is For Life & Not Just For Christmas

Posted by Dave Jordan on Thu, Dec 14, 2017

Ok, so you are unlikley to see this on a car bumper sticker but FMCG Distributors will have a significant impact on your sales performance, probably your variable pay bonus and therefore your CEO aspirations! How have you treated your Distributors this year? Were they the usual pain in the proverbial - failing to achieve targets, not paying on time, always moaning about trading terms? Of course, some Distributors do fit this stereotype but others are keenly trying to be treated as and to be, equal partners in your business success. But do you see this?

How are things going in Q4? Have you fallen into the trap of the “sales bonus push”? Year end stock clearance FMCG Breaking all the supply and sales phasing rules you have been trying to drum into Distributors? Did you strictly maintain discipline on Sales & Operational Planning or did the last quarter deteriorate into a “sell whatever we've got in the warehouse” scenario?

Companies that spend time and effort in proactively guiding their Distributors, providing relevant training and support inevitably succeed in the market place. Yes, at the end of the day Distributors have to stand on their own two feet but so many FMCG companies assume an organisation calling itself an “FMCG Distributor” inherently knows how to properly support any specific business.

If you do not pay attention to the Traditional Trade (TT) distribution side of your business then you are asking for trouble and that trouble usually ends in divorce along with all the discontinuity baggage separation brings. You need to avoid your choice of Distributors becoming like the English Premier League where managers get about 5 minutes to make an impact before being shown the door. (Strange though, that all these football managerial failures usually find another highly paid role; the latest being Big Sam Allardyce)

So, as we approach a special time of the year why not think about your Distributors and ask yourself if you have given them a fair crack of the whip?  If not, then you might consider a New Year resolution to develop a strategy for mutual success. This is far better than continually highlighting deficiencies and using backward looking, discipline focussed KPIs to bash them on the head.

Sit down with your RTM Distributors regularly, evaluate their strengths and weaknesses and agree to do something about the latter. Simply running through a Route To Market evaluation together can work wonders in establishing trust and cooperation. Do yourself a favour and do this now before Q1 next year also becomes history that you cannot change.

Click on the RTM link below and go!

CTA RTM Free Download resized 600

Image courtesy of stock.xchnge at freeimages.com

Tags: FMCG, Route to Market, Dave Jordan, CEO, Performance Improvement, Supply Chain, S&OP, Distribution

FMCG Year-end 2017: Distributors overstocked?

Posted by Dave Jordan on Thu, Nov 30, 2017
How is 2017 going so far? Are you in cruise control or is your business chaos central? Be honest now! The last quarter of the year is always difficult to manage in order to achieve 2017 results without negatively impacting 2018.
Interim_Management_FMCG_Dave_Jordan_SKU_Distributor_Inventory.jpgWhen your business still relies on a healthy traditional trade serviced by distributors the balance of sales in versus sales out is always a challenge. Any major discrepancy will alert the auditors and in particular you do not want be accused of loading the trade to meet the planned numbers. 
 
If you have let your distributor stocks get out of control this can be remedied through discipline and rigour plus top-down leadership ideally through a dynamic S&OP process.
  1. Month, quarter and year-end push - Run your business on one set of numbers agreed at Board level and ensure NOBODY operates an alternative private agenda. If you follow a decent S&OP process such last minute, period-end pushes can be avoided. Let's face it; period-end sales pushes place huge strain on everybody in the organisation yet only the sales people receive a bonus for these efforts!

  2. Failed launches - Be realistic with new product launch volume projections. Brand Managers will always, repeat always overstate how successful their new SKU is going to be. They do not want to appear unambitious and nor do they want to run out of stock. This is what happens when self-interest decisions are taken outside of a healthy S&OP process.

  3. Old label stock - New launches are not a surprise and with half-decent planning you can avoid seeing old label inventory ageing in the distributor warehouse. As soon as you start pumping in a new label SKU the distributor will stop selling the old one. "Well that's his problem" - no it isn't! It blocks his warehouse, his cash and your customer service. If you plan your launch volume ramp-up well you can avoid this. Consider running a sink-market region where all stocks of the old label SKU are sold out, possibly with a discount.

  4. Old and expired promotions - If promotions have failed and do not move then bite the bullet and take rapid and direct action. Dismantle co-packs and put the valuable and original SKUs back into stock and/or re-label special offer packs.

  5. Customer returns - Producer sales forces struggle with this and particularly when it concerns International Key Accounts. You need a cast iron agreement on responsibility AND authority for customer returns. If this is contractually agreed then fine, take the stock back and recycle within your system. If there is no definite agreement then you leave the door open to individual sales people taking unilateral decisions to accept returns to get clients off their backs. Unexpected and unmanaged returns cause havoc in logistics, warehousing and in ERP's.

  6. Producer forecasting errors - No forecast is ever 100% perfect and nor should it be, by definition. However, if you measure your forecast accuracy by SKU and take actions to improve accuracy then this source of overstock can be significantly reduced. Ignore calls to measure accuracy by brand or by category as the data is useless to the people supplying the products.

  7. Damaged and expired. This is really an accumulation of all the items above. Damaged and expired products will be present in any business. To ensure they do not appear in the ERP as good stock it is important to write off and dispose of them as soon as possible.

If you need to destock your distributors before the auditors come sniffing then you should get on with this quickly. No resources available? Look at who is available to help you get these tasks completed. Crush the internal resistance and get the job done now!

Image courtesy of nonicknamephoto at freedigitalphotos.net

 

Tags: Dave Jordan, CEE, Traditional Trade, S&OP, Forecasting & Demand Planning, Distribution, Inventory Management & Stock Control

FMCG Trade Loading & 4th Quarter Challenges - deja vue all over again!

Posted by Dave Jordan on Mon, Nov 27, 2017

Some things never change and FMCG 4th Quarter challenges certainly do not. The same challenges are clearly present and what is astonishing is that some companies are still making short term, expensive efforts to “make the sales numbers”. I don't think that is very clever; instead of pouring cash into a black hole without guaranteed return why not divert resources to sort out the underlying problems? They will not go away on their own!

There is a little bit of growth in the market but those green shoots are still relatively puny. Assuming growth is to return, those companies that had the vision to be critical of how they do business in difficult times will be the winners. All the others will be achieving the numbers by loading the trade….again and again.

You should have a good feeling for how things have gone in Q3 and what is still needed in Q4 to reach the numbers you committed to over 12 months ago. "Committed" may well be the wrong word as you were probably forced/cajoled/persuaded to accept figures you knew would be difficult if not nigh impossible to achieve. However, for the greater corporate good you took it on the chin and said “yes, we will do it” (no idea how but cést la vie).

Exactly how are you going to achieve those seemingly distant numbers? The corporate world remains in trouble but so are consumers. The two groups are not disconnected; consumers are having a very tough time considering the increasingly clueless government austerity measures that continue to drip out around the globe. Consumers simply do not have the money to prop up your annual plan and what money they do have is likely to be rationed to be sure of a reasonably happy Christmas. Remember, consumers owe you nothing, not a penny!

One thing you may consider if sales are not going well is to fall into the trap of month-end loading. Let us consider this scenario which is far from uncommon even in “blue-chip” companies. Let us assume October sales are poor in the first 2 weeks and then the word is given to “push” stocks into the trade. Discounts are given, favours called in and hey presto, the required target number is achieved and you and your bosses think you are back on tSupply_chain_sales_planning_results.jpgrack.

You have pushed so much stock into the trade that distributors are short of cash and International Key Accounts platforms are overstocked. Consumers do not drink more beer or wash their hair more often or eat extra snacks because you sold at a discount. They have taken advantage of your offers and have filled their own domestic warehouses ready for Christmas and possibly beyond.

Then we get to November. This time sales are poor into the third week and the rallying call of the stock push does not seem to be working. Support  and discretionary spend budgets are raided again and yet more stock is forced into places where it has no demand. Despite this, the motivation of achieving targets and securing a bonus ensure that the right number is flashed to HQ at the end of the month.

Now just December to get through……even if it is really only a 16/17 day month for selling. You are so close that a few more discounts and the promotion of high value SKUs means you close the year on target. It’s that champagne moment, get the fat cigars out!!!!

Sit down and think about what you have just done for the sake of a slap on the back and a bonus. You have turned the operation of the company upside down, contravened numerous policies, abused S&OP (if you use it) and unfairly stretched your staff in all departments. 

If you are brutally honest you will know you have sold January’s demand over the last quarter the year. You will not get away with that for long as it will come back to bite you eventually!

With stretched resources it is difficult for companies to see what is really happening across all departments and how decisions in one area cause a detrimental effect in another. If you insist on chasing the full year numbers/bonus then you might at least take on some professional support and understand the damage you are causing to yourself.

Image courtesy of Stuart Miles at freedigitalphotos.net

 

Tags: FMCG, Dave Jordan, CEO, Performance Improvement, S&OP, Forecasting & Demand Planning, Sales, Distribution, Integrated Business Planning

FMCG Route To Market Challenges; Learn from IKEA

Posted by Dave Jordan on Sun, Nov 19, 2017

There is no excuse in visiting IKEA on a Sunday before watching 22 millionaires with daft hair styles kick a football around on live telly. The weather was cold and the air was full of autumn drizzle and as I turned into the car park the scale of the folly dawned on me; the IKEA car park was bursting at the seams. Cars were on pavements, on grass verges and on the approach road; grim.

There were entire extended families pouring out of cars and into the store. In parallel,   equal numbers were exiting before trying to squash brown flat-packs of “destroy it yourself” furniture and fittings called Grult, Splad and Twong into and onto impossibly small cars.

What do these people do when they have removed all the air from their cars? Do they give granny and granddad a few coins to take the bus home? There is no way you can fit all the people and the flat-pack must-haves into some of these cars.  Maybe that is why IKEA provides free rope on the loading bay; it is to strap the unfortunate grandparents onto the roof of the car.

Oh well, here now so might as well join the hoards of people unable to control a shopping trolley; absolutely no sense of direction and with variable but low levels of short-term memory. I hooked a yellow bag over my shoulder, picked up a pencil and I too became a zombified IKEA shopper!

I know there is a science to store layout design whether it is a Tesco supermarket, a Hornbach DIY store or an M&S type outlet. The store owner wants everyone to see everything at least once and they want exposure to be just at the right time when for example, the shopper has been subliminally convinced that the bright pink Plobo stool would look really nice in their kitchen (believe me it won't).

Ikea Shop Floor FlowOh, but the chaos this causes in an IKEA store! Being a supply chain type I would make the whole store strictly one-way with shoppers not permitted to double-back to soft furnishings or for a forgotten low energy light bulb. In fact, if I had my way I would make the floors with a defined downhill gradient and ensure trolley wheels were oiled hourly to help people on their way, through the broken furniture bargain section, past the cheap fast food and out into the car park. What about a small battery pack on each trolley which delivered a persuasive electric tingle if you tried to push the trolley against the traffic? Too extreme, possibly?

Think of all the wasted hours and effort of moving all the way through the store then insisting on reversing the entire route and getting in the way of everybody else. Then came my eureka moment. I realised where I had seen this behaviours before and why I perversely enjoyed dodging the trolleys in the IKEA maze.

This is precisely what many FMCG, Brewing and Pharmaceutical companies suffer in their Route to Market distribution planning every single day. Wasted miles, wasted fuel, wasted hours and in all that time there are customers not being serviced.

RTM Assessment toolIf your sales are struggling along towards the end of the year and the stream of excuses for gaps appears endless, you might take a close look at how much time your sales people spend travelling to, selling to and guiding distributors. If your sales team has adopted the IKEA system logic then you have just spotted a huge opportunity to improve your Route to Market (RTM)performance.

Get out from behind the desk and have a closer look. Get some IKEA rope, tie yourself to the roof a salesman's car and see where some simple experience, thought and logic can significantly add to your bottom line. 

Too busy to ease yourself out of that IKEA chair? Then seek out some professional resource to take a cold hard look at how you operate RtM in the traditional trade.

IKEA image courtesy of A littleSprite 

Tags: Route to Market, Interim Management, Dave Jordan, Supply Chain, Traditional Trade, Sales, Distribution, RTM Assessment Tool

Supply Chains – A second look: What do all those initials really mean?

Posted by Dave Jordan on Wed, Feb 08, 2017

In common with many business functions Supply Chains adopt multiple initials and/or acronyms to describe various tasks and processes they manage on a daily basis. Those not familiar with SC-speak will often sit bemused as various initials are quoted and debated and then usually blamed for some tenuous lost sales claimed by Sales and Marketing.

Here I take a fresh look at just a small selection of those Supply Chain initials and acronyms.

SC – Super Colleagues. Well, I may be biased but that is what you usually find. Supply Chain people must react to wildly varying demands and impossible timings but more often than not they succeed to get stock to the right place at the right time.

SOP - Supports Outstanding Performance. If you do not follow an S&OP process and your business is doing well and is robust then a pat on the back is deserved. However, if your business is struggling then you might consider the benefits of S&OP which can make all the difference.

IBP – Irritating But Productive. Often considered to be a more mature version of S&OP, Integrated Business Planning can be similarly difficult to get started but when everything clicks, business benefits.

Supply_Chain_FMCG_Initials.jpgSAP - Spreadsheets Are Preferred. The use of spreadsheets is prevalent in many businesses and equally common is the number of CEO’s who believe spreadsheets are NOT being used in their workplace! They almost certainly are but what can you do about this?

IKA- Irritating, Keep Away. In mature Western European markets, big name International Key Accounts are firmly established but in many other parts of the world the reality is quite the reverse. Traditional Trade is a very important part of many developing businesses yet most fail to pay sufficient attention to the continued growth potential of the TT channel.

SKU - Sales Keep “Upping”. Introducing new SKUs really should be a cross business decision taken within the context of S&OP and with sound financial analysis. Sadly, this does not happen very often as businesses rack up lengthy SKU lists where the tail items do not even pay for themselves in turnover, margin or profit.

KPI - Keeping People Interested. The adage of “if you don’t measure then you cannot improve” is certainly true here. Take care to manage your KPI’s closely and frequently but make sure you have a set which ensures everyone knows how they impact collective team performance and results. Visibly reward against the relevant KPIs and your staff will keenly follow them.

ERP – Everyone Requires Products. The whole purpose of your Enterprise Resource Planning is to get your products to the right place at the right time and at optimum cost. Occasionally, priorities must be made between demanding customers and a good ERP will guide your decisions.

PLP -  People Loading Products. Think long and had before outsourcing your outbound logistics operations to a 3rd party as they may not be ready to take on your business, seamlessly.  Prepare thoroughly and ensure you know exactly what you want from them and the relationship. A big step that is difficult to reverse without pain so be careful!

WMS - Where’s My Stock? Your 3PLP partner should be left to run their own business as that is why you pay them. However, you need to be involved in the stock counting process or you will lose sales and experience costly year-end write offs.

4PLP - 4 People Loading Products. If you have successfully used 3PLPs for some time you might wish to take a look at what a 4PLP can offer to the business. This is certainly not for everyone but can be very cost effective.

RTM - Retail Takes Money. Whether your focus is on IKA or TT how you manage your distribution network will be a key driver of your success in the market place. It is a fact that companies spending time and effort getting their developing market TT distributor networks in good order are more successful.

FIFO – Find It, Fuss Over. When you (or your 3PLP) operate a tight warehousing operation you will know where your stock sits, how old it is and what needs to move out to avoid write off costs and the inevitable poor customer service.

OTIF - Often The Invoice Fails. If you fail to deliver orders on time and in full you invite the customer to challenge the invoice and delay payment until you have made financial adjustments.

There are many, many more examples of SC-speak but this set will do for a KO so TTFN!

Image courtesy of boulemonademoon at freedigitalphotos.net

 

Tags: SKU, FMCG, Route to Market, Dave Jordan, KPI, Traditional Trade, S&OP, Logistics Management, Distribution, Inventory Management & Stock Control